Post Holdings has expanded its presence in the pet food industry by finalizing an agreement to acquire Perfection Pet Foods, a US-based company.
In February, Post Holdings entered the US pet-food market with a significant acquisition of several pet-food brands from J.M. Smucker, valued at approximately $1.2 billion. Now, the company is poised to acquire Perfection Pet Foods for $235 million.
On October 10th, Post Holdings announced its anticipation of completing the transaction in the last quarter of 2023, aligning with the commencement of the company’s new financial year.
California-based Perfection Pet Foods, operating out of the Golden State, specializes in crafting private-label pet food and snacks while also extending co-manufacturing services. Their wide-ranging expertise encompasses the production of both cat and dog foods, catering to a diverse pet food market.
Post Holdings is poised to acquire ownership of Perfection Pet Foods’ two Visalia-based factories. The parent company of Weetabix and Peter Pan peanut butter, known for its human food brands, stated that the Perfection Pet Foods acquisition will not only enhance its manufacturing capacity for in-house pet food production but also serve as an entry point into the private-label and co-manufacturing segments of the pet-food industry.
In a subsequent communication, Nicolas Catoggio, President and CEO of Post Holdings’ Consumer Brands Division, mentioned that 250 employees from Perfection Pet Foods will become part of this division.
The company acquired six brands from its American food counterpart, J.M. Smucker, which encompassed Rachael Ray, Nutrish, 9Lives, Kibbles’n Bits, Nature’s Recipe, and Gravy Train. This transaction also included the purchase of three manufacturing facilities, with two located in Pennsylvania and one in Kansas.
Post Holdings, a prominent American food producer, primarily concentrates on its consumer portfolio, which centers around breakfast cereal, eggs, and frozen food. Additionally, the company possesses popular cereal brands like Alpen and Pebbles, and it has a presence in the egg market through products such as Easy Eggs and Abbottsford Farms.
During discussions on the second-quarter results in May, President and CEO Rob Vitale expressed a strong interest in broadening the presence of publicly-listed Post Holdings in the animal food category.
His optimism was even more evident when he presented the third-quarter figures in August, coinciding with the company’s upward adjustment of guidance for adjusted EBITDA for fiscal 2023.
At that time, Vitale mentioned that this metric was expected to reach approximately $1.18 billion to $1.20 billion by the end of the year, surpassing the previous guidance of $1.09 billion to $1.13 billion.
Post Holdings anticipates that Perfection Pet Foods will contribute approximately $25 million to adjusted EBITDA in the 12 months following the completion of the transaction.
In the third quarter ending on June 30, the company disclosed net sales of $1.9 billion, marking a 21.9% increase compared to the previous year. Operating profit also saw substantial growth, reaching $158.3 million, a 50% increase. Moreover, adjusted EBITDA experienced a robust rise of 34%, reaching $338 million.
In August, Vitale mentioned that the pet food segment added $275.3 million to the total net sales figure.
Talking about acquisition prospects for the category in May, he said, “We are open for M&A, particularly around opportunities within and without pet that have the ability to be freestanding businesses within our portfolio.
“We have a lot of opportunities as you would imagine once we became an active player in pet. But we look through a lens of both human and financial resources when we start to think about what the next step should be.”
Commenting on the Perfection Pet Foods deal, Vitale said, “Perfection Pet nicely complements our recent acquisition of several pet-food brands by enabling us to compete in additional segments and more effectively leverage the combined manufacturing footprint.”
